The Office of General Counsel issued the following
opinion on June 21, 2005, representing the position of the New York State Insurance
Department.

Re: Emergency Treatment,

Physicians Services

Issues:

1. Must an insurer reimburse a physician in
accordance with the "prudent layperson" standard for treatment rendered
subsequently to services rendered in an Emergency Department of a hospital?

2. Assuming that an insurer is required to
reimburse the physician and the physician is not a participating health care provider with
the insurer, how is the reimbursement determined?

3. What are the reimbursement rules for a
non-participating health care provider if the patient is insured under managed care in
accordance with the Medicare or Medicaid program?

4. May a managed care organization require
pre-authorization, even when the services have already been rendered?

5. What recourse does a health care
provider have if a third party payer refuses to make payments when the provider is legally
obligated to render services?

Conclusions:

1. The obligation of an insurer is
determined by its policy or contract. Since, based upon the description, the treatment
would have been rendered after the patients condition was stabilized, the
"prudent layperson" standard would not be applicable.

2. The reimbursement obligation, including
the definition of "usual, customary and reasonable", is to be found in the
insurers policy or contract.

3. The reimbursement rules are determined
under the specific statutes and regulations applicable to the governmental program and are
not under the jurisdiction of the New York Insurance Department.

4. The ability of a managed care
organization to require pre-authorization, outside of an emergency condition, is governed
by the policy or contract.

5. If a third party payer is contractually
obligated to make payment and is under the jurisdiction of the Insurance Department, a
complaint may be made to the Departments Consumer Services Bureau. If the third
party payer is not contractually obligated to make payment, the health care
providers sole recourse is against the patient.

Facts:

The inquirer represents a number of
orthopedic surgeons that have formed a Group, which has contracted with three hospitals in
the Syracuse area to provide emergency orthopedic care. The obligation of being on-call at
each hospital is allocated by the Group among its member physicians.

If, after stabilizing the patient, it is
determined by the Group physician that the patient need not be admitted to the hospital,
the Group physician notifies the patient of the necessity of a follow-up visit. If the
patient does not have his or her own orthopedic specialist, the Group physician will make
an appointment for a subsequent visit at the Groups office. If the Group physician
determines that hospitalization is necessary, the Group physician becomes the physician
responsible for further care in the hospital.

The inquirer indicates that, even if the
patient has his or her own orthopedic specialist, such physician may refuse to accept
responsibility for a patient, either on an in-patient or out-patient basis, once the
initial treatment has been provided by the Group physician.

The inquirer further indicates that, in
many instances, the insurer that has issued a managed care contract covering the patient
has refused to make payments to the Group physician who is not a participating health care
provider with that insurer or has made a payment that the Group physician regards as
inadequate.

The inquirer contends that, since the Group
physician is obligated to continue to treat the patient, both under New York law and the
Emergency Medical Treatment and Active Labor Act (EMTALA), Public Law No. 99-272 (1986),
codified at 42 U.S.C.A. § 1395dd (West 1992 and 2003 Supplement), the insurer is
obligated to make a reasonable payment pursuant to the statutory requirement to pay for
emergency services.

Analysis:

Background:

There are three main types of managed care
organizations, indemnity insurers, HMOs, and self-funded employee welfare benefit plans.
As indicated below, the Insurance Department has jurisdiction over only the first two
types of organization.

Indemnity insurers are regulated solely by
the Insurance Department. The regulation of HMOs is bifurcated between the Department of
Health, which regulates quality of care, and the Insurance Department, which regulates
subscriber contracts, in accordance with New York Public Health Law § 4406(1) (McKinney
2002), and much of the HMOs finances. In accordance with the Employee Retirement
Income Security act (ERISA), 29 U.S.C.A. § 1144(b)(1)(B) (West 1999), self-funded
employee welfare benefit plans are not to be deemed insurers under state law and may not
be regulated as such.

New York Insurance Law § 4801(c) (McKinney
2000) defines a managed care contract:

a managed care health insurance
contract or managed care product shall mean a contract which requires
that all medical or other health care services covered under the contract, other than
emergency care services, be provided by, or pursuant to a referral from, a designated
health care provider chosen by the insured (i.e. a primary care gatekeeper), and that
services provided pursuant to such a referral be rendered by a health care provider
participating in the insurer's managed care provider network. . . .

In addition to managed care contracts, many
indemnity insurers issue contracts where there is a financial advantage to the insured in
utilizing a health care provider in the insurers Preferred Provider Network. When an
indemnity insurer utilizes a PPO, services provided by a participating health care
provider are paid for by the insurer, either directly to the provider or in reimbursement
to the insured or subscriber, less a contractual co-pay. If the services of an
outof-network provider are utilized, in addition to any applicable deductible, the
insured or subscriber must make a co-pay. For such out-of-network services, the
insurers reimbursement is usually on the basis of the usual, customary and
reasonable (UCR) charges for the particular service.

An HMO is defined in New York Public Health
Law § 4401 (McKinney 2002):

1.Health maintenance
organization . . . means any person, natural or corporate, or any groups of such
persons who enter into an arrangement, agreement or plan or any combination of
arrangements or plans which propose to provide or offer, or which do provide or offer, a
comprehensive health services plan.

2.Comprehensive health services
plan . . . means a plan through which each member of an enrolled population is
entitled to receive comprehensive health services in consideration for a basic advance or
periodic charge. A plan may include the provision of health care services which are
covered by the organization at the election of enrollees by health care providers not
participating in the plan pursuant to a contract, employment or other association to the
extent authorized in section forty-four hundred six of this article; provided, however,
that in no event shall an enrollee elect to have a non-participating provider serve as the
enrollee's primary care practitioner responsible for supervising and coordinating the care
of the enrollee.

3.Comprehensive health services
means all those health services which an enrolled population might require in order to be
maintained in good health . . . . Such term may be further defined by agreement with
enrolled populations providing additional benefits necessary, desirable or appropriate to
meet their health care needs.

. . .

New York Public Health Law § 4406(2)
provides:

(a) Upon approval of the commissioner, an
organization may implement an out-of-plan benefits system that allows enrollees to use
providers not participating in the plan . . . . . . . .

(b) Except as provided in paragraph (c) of
this subdivision, an organization may not permit the benefits provided pursuant to such
out-of-plan system to exceed ten percent of the total health care expenditures of the
organization, as determined on a quarterly basis . . . . In determining the amount of
benefits provided in connection with the use of such providers, an organization shall not
include benefits provided pursuant to a referral made by a participating provider or
benefits provided in emergency situations.

(c) An organization may exceed the ten
percent level by up to two percent in any given quarter provided that the organization
does not exceed the ten percent level by the end of the following quarter.

. . .

If an HMO subscriber has not elected a
Point of Service option, except for emergency care, all services must be provided by
in-network health care providers. If the HMO subscriber has elected a POS option, then the
reimbursement rules for non-participating health care providers are set forth in the HMO
contract. It is the Insurance Departments understanding that reimbursement is
usually on the basis of UCR.

Additional Relevant Statutes:

The requirement for coverage of emergency
conditions is set forth, for individual policies of commercial health insurers, in New
York Insurance Law § 3216(i)(9) (McKinney 2000 and 2005 Supplement):

Every policy which provides coverage for
inpatient hospital care shall also include coverage for services to treat an emergency
condition in hospital facilities. An emergency condition means a medical or
behavioral condition, the onset of which is sudden, that manifests itself by symptoms of
sufficient severity, including severe pain, that a prudent layperson, possessing an
average knowledge of medicine and health, could reasonably expect the absence of immediate
medical attention to result in (A) placing the health of the person afflicted with such
condition in serious jeopardy, or in the case of a behavioral condition placing the health
of such person or others in serious jeopardy, or (B) serious impairment to such person's
bodily functions; (C) serious dysfunction of any bodily organ or part of such person; or
(D) serious disfigurement of such person. (Emphasis added).

A similar requirement exists, New York
Insurance Law § 3221(k)(4) (McKinney 2000 and 2005 Supplement), for group policies of
commercial health insurers and, New York Insurance Law § 4303(a)(2) (McKinney 2000
and 2005 Supplement), for contracts of not-for-profit health insurers and all HMOs.

EMTALA provides:

(a) Medical screening requirement. In the
case of a hospital that has a hospital emergency department, if any individual . . . comes
to the emergency department and a request is made on the individual's behalf for
examination or treatment for a medical condition, the hospital must provide for an
appropriate medical screening examination within the capability of the hospital's
emergency department, including ancillary services routinely available to the emergency
department, to determine whether or not an emergency medical condition . . . exists.

(b) Necessary stabilizing treatment for
emergency medical conditions and labor. (1) In general. If any individual . . . comes to a
hospital and the hospital determines that the individual has an emergency medical
condition, the hospital must provide either-- (A) within the staff and facilities
available at the hospital, for such further medical examination and such treatment as may
be required to stabilize the medical condition, or (B) for transfer of the individual to
another medical facility in accordance with subsection (c). . . .

(c) Restricting transfers until individual
stabilized. (1) Rule. If an individual at a hospital has an emergency medical condition
which has not been stabilized . . . the hospital may not transfer the individual unless--
(A) (i) the individual (or a legally responsible person acting on the individual's behalf)
after being informed of the hospital's obligations under this section and of the risk of
transfer, in writing requests transfer to another medical facility, (ii) a physician . . .
has signed a certification that based upon the information available at the time of
transfer, the medical benefits reasonably expected from the provision of appropriate
medical treatment at another medical facility outweigh the increased risks to the
individual . . . or (iii) if a physician is not physically present in the emergency
department at the time an individual is transferred, a qualified medical person . . . has
signed a certification described in clause (ii) after a physician . . . in consultation
with the person, has made the determination described in such clause, and subsequently
countersigns the certification; and (B) the transfer is an appropriate transfer (within
the meaning of paragraph (2)) to that facility. . . .

(d) Enforcement.(1) Civil monetary
penalties. . . . (B) Subject to subparagraph (C), any physician who is responsible for the
examination, treatment, or transfer of an individual in a participating hospital,
including a physician on-call for the care of such an individual, and who negligently
violates a requirement of this section, including a physician who--(i) signs a
certification under subsection (c)(1)(A) that the medical benefits reasonably to be
expected from a transfer to another facility outweigh the risks associated with the
transfer, if the physician knew or should have known that the benefits did not outweigh
the risks, or (ii) misrepresents an individual's condition or other information . . . is
subject to a civil money penalty of not more than $ 50,000 for each such violation . . . .
(C) If, after an initial examination, a physician determines that the individual requires
the services of a physician listed by the hospital on its list of on-call physicians . . .
and notifies the on-call physician and the on-call physician fails or refuses to appear
within a reasonable period of time, and the physician orders the transfer of the
individual because the physician determines that without the services of the on-call
physician the benefits of transfer outweigh the risks of transfer, the physician
authorizing the transfer shall not be subject to a penalty under subparagraph (B).
However, the previous sentence shall not apply to the hospital or to the on-call physician
who failed or refused to appear. (2) Civil enforcement. (A) Personal harm. Any individual
who suffers personal harm as a direct result of a participating hospital's violation of a
requirement of this section may, in a civil action against the participating hospital,
obtain those damages available for personal injury under the law of the State in which the
hospital is located, and such equitable relief as is appropriate. . . .

(e) Definitions. In this section: (1) The
term emergency medical condition means-- (A) a medical condition manifesting
itself by acute symptoms of sufficient severity (including severe pain) such that the
absence of immediate medical attention could reasonably be expected to result in--(i)
placing the health of the individual . . . in serious jeopardy, (ii) serious impairment to
bodily functions, or (iii) serious dysfunction of any bodily organ or part; . . . .(3) (A)
The term to stabilize means, with respect to an emergency medical condition
described in paragraph (1)(A), to provide such medical treatment of the condition as may
be necessary to assure, within reasonable medical probability, that no material
deterioration of the condition is likely to result or occur during from the transfer of
the individual from a facility . . . . (B) The term stabilized means, with
respect to an emergency medical condition described in paragraph (1)(A), that no material
deterioration of the condition is likely, within reasonable medical probability, to result
from or occur during the transfer of the individual from a facility . . . .

New York Education Law § 6530 (McKinney
2001) defines professional misconduct by a physician. Among the proscribed acts is:

30. Abandoning or neglecting a patient
under and in need of immediate professional care, without making reasonable arrangements
for the continuation of such care, or abandoning a professional employment by a group
practice, hospital, clinic or other health care facility, without reasonable notice and
under circumstances which seriously impair the delivery of professional care to patients
or clients;

Insurers Obligation:

Under the facts presented, when the patient
is either sent home or admitted as an in-patient, the condition has stabilized, within the
meaning of EMTALA, so an emergency condition as contemplated by New York Insurance Law
§§ 3216(i)(9), 3221(k)(4), or 4303(c)(2) would no longer exist. Accordingly, the
provisions of the applicable insurance policy or contract concerning reimbursement for the
services of non-participating health care providers would govern. Any patient continuing
with the services of a Group physician would be deemed to have voluntarily assumed the
risk of receiving little or no reimbursement.

If the insurance policy or contract
provides reimbursement for the services of a non-participating health care provider, the
terms of such reimbursement are set forth in the policy or contract. If, as is often the
case, the policy or contract provides for reimbursement on a UCR basis, the definition of
UCR, the percentage of UCR that will be reimbursed, and the basis of calculating it are
also set forth in the policy or contract. With respect to group policies and contracts,
many insurers offer the policyholder a limited choice of what percentage of UCR
reimbursement will be purchased.

If the injury was caused by an industrial
accident, New York Workers Compensation Law § 13(a) (McKinney 2005), or an
automobile accident, New York Insurance Law § 50108 (McKinney 2000), any treating health
care provider is limited to the established fee.

Medicare and Medicaid Managed Care:

Managed care under Medicare is governed by
42 U.S.C.A. § 1395w-21 et seq. (West 1992 and 2003 Supplement). The operations of
Medicaid managed care are governed by both Federal statutes and New York Social Services
Law § 364-j et seq. (McKinney 2003 and 2005 Supplement). While both programs
utilize insurers, including HMOs, as contractors, the Insurance Department has no
jurisdiction over the operations of the programs. Accordingly, questions concerning the
programs should be addressed to:

New York Insurance Law § 4902(a)(8)
(McKinney 2000), dealing with commercial and not-for profit health insurers requires for
such entities, or any utilization review agent with which the insurer may contract. the:

Establishment of a requirement that
emergency services rendered to an insured shall not be subject to prior authorization nor
shall reimbursement for such services be denied on retrospective review; provided,
however, that such services are medically necessary to stabilize or treat an emergency
condition.

New York Public Health Law § 4902(1)(h)
(McKinney 2002) has an identical requirement for HMOs. In accordance with New York
Insurance Law § 4900(c) (McKinney 2000) and New York Public Health Law § 4900(3)
(McKinney 2002), the definition of emergency conditions is identical to that set forth in
New York Insurance Law § 3216(i)(9).

If, as is the case with the situations set
forth, there is no emergency condition, and the insurer or HMO retrospectively denies
reimbursement because it contends there is a lack of medical necessity, a health care
provider may, in accordance with New York Insurance Law § 4904(a) (McKinney 2000) or
New York Public Health Law § 4904(1) (McKinney 2002) appeal such denial internally and,
if not successful, in accordance with New York Insurance Law § 4910(b) (McKinney 2000) or
New York Public Health Law § 4910(2), externally.

If, however, the retrospective denial is
because there is no coverage or there is a disagreement as to the amount of reimbursement,
there are no appeal rights. New York Insurance Law § 4900(h) and New York Public Health
Law § 4900(8). However, if the policy is one described in New York Insurance Law § 4801,
in accordance with New York Insurance Law § 4802 (McKinney 2000) there would have to be a
grievance procedure for the insured.

Complaints:

If coverage is provided under an insurance
policy or contract, including one issued by an HMO and one covering an ERISA employee
welfare benefit plan, but not one covering Medicare managed care, and the contract
provides for coverage for non-participating health care provider, complaints may be made
to:

If, however, the applicable policy or
contract does not provide coverage of a non-participating health care provider, the
providers sole recourse is against the patient or any other guarantor of payment

Obligations Under Other New York Statutes
and EMTALA:

While the Insurance Department does not
believe the Group physician would be in violation of EMTALA, any determination as to that
question would have to be made by the United States Department of Health & Human
Services. The Insurance Department can express no opinion as to whether, if there is a
violation of EMTALA, in addition to the cause of action provided against the hospital by
EMTALA, 32 U.S.C.A. § 1395dd(d)(2), there is a cause of action against the Group
physician.

While the Insurance Department does not
believe that under the circumstances presented the Group physician would be deemed to have
abandoned the patient, in contravention of New York Education Law § 6530(30), any initial
determination as to that question would have to be made by the Office of Professional
Misconduct in the Department of Health. Whether the patients regular physician is
guilty of professional misconduct by refusing to treat the patient subsequent to treatment
by the Group physician would also be a question for OPMC.

For further information you may contact
Principal Attorney Alan Rachlin at the New York City office.